Fed Tapering Delay Is Good News for Hedge Fund Hiring Expectations

On September 18, 2013, the Federal Reserve made a decision on its long-awaited Quantitative Easing Tapering process, choosing to delay the move until market factors presented a better opportunity. The investment markets breathed a collective sigh of relief as that decision was announced. It’s been a well-known fact that the Federal Reserve’s continued purchasing of troubled mortgage-backed securities has been shoring up the U.S. investment and banking markets. The Tapering move at the end of this summer was expected to be the first step in letting the market walk on its own again.

Hiring to Continue

Given the change in direction, or the delay more aptly, hedge funds are expected to continue their hiring activities going forward. Like many companies, many were holding cash close to the vest to use as a rainy-day fund when a fully-exposed market began to come into vogue. With the Feds stating clearly that day will not come yet, or likely in 2013 at all, fund managers can instead move operationally with free resources to bolster their staffing.

With revenues rising across multiple industries, fund managers were already engaged in expansion of their own, with eight out of 10 managers seeing financial gains in their fields (KPMG’s 2013 Investment Management Business Outlook Survey). Further, out of the same managers surveyed, 84 percent are expecting continued improvement. Add in the fact that the government is not going to remove its support of markets anytime soon in 2013, that figure, if surveyed again, would likely be in the ninetieth percentile.

A lot of ground has had to be regained from losses and cutbacks since 2008. And 2013 has been no exception to this improvement direction. Almost one out of two executives in the financial industry has been engaged in efforts to increase staffing, albeit at lower entry-level salary price points. The large majority of these positions are also in the U.S., making up almost two-thirds of the investment hiring occurring globally.

Newbies Welcome

Most notably, the current activity expected to continue is not being picky about the background experience of candidates. Many hedge funds are bringing in candidates who are complete rookies to the business, preferring to deal with raw resources versus competing for refined analysts. That bodes well for candidates coming right out of school last summer and this winter. It also means a shift in hiring management to a preference of molding loyal people versus grabbing trained mercenaries who are quick to jump away again. This trend will be expected to continue with Tapering delayed and ongoing investment growth in the market continuing.

In Summary

A large number of market watchers were expecting a Tapering implementation in September to throw cold water on a weak, but recovering, market. That would have also chilled investment hiring as well. However, with the current Federal Reserve decision, folks can expect a balmy Indian summer as fund managers continue their growth plans instead.